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THE ROLE OF WORK VOLITION AND ORGANIZATIONAL COMMITMENT
IN THE RELATIONSHIP BETWEEN TOTAL REWARDS
AND EMPLOYEE RETENTION
ALAMZEB AAMIR
A thesis submitted in fulfilment of the
requirements for the award of the degree of
Doctor of Philosophy (Management)
Faculty of Management
Universiti Teknologi Malaysia
DECEMBER 2016
iii
DEDICATION
I dedicate this dissertation to my beloved parents
iv
ACKNOWLEDGEMENT
Beyond expression of my sincerest gratitude to the Almighty Allah and His
beloved Prophet Muhammad (peace be upon him), I wish to give earnest credit to
those who shared their time, ideas, encouragement, prayers and moral support that
contributed, significantly and in various ways, to the successful completion of my
PhD studies. I acknowledge, heartily and respectfully, my doctoral supervisor, Prof.
Dr.Abu Bakar Bin Abdul Hamid for his valuable feedback, expertise and advice. His
intellectual capabilities and inspiring experiences uplifted my efforts as a researcher,
from the stage of infancy to maturity. I am highly indebted for his cooperation,
encouragement, and above all, patience in answering even immature questions. I
simply could not have aspired for better supervisor and a more congenial teacher.
Despite his busy schedule, he always guided, facilitated and supported me.
Furthermore, I would also like to acknowledge the cooperation of administrative
staff of Faculty of Management (UTM). My parents, brother Mohammad Naseer
Afridi, and Wife Nazia Gul deserve special appreciation for their inseparable support
and prayers. Finally, I would like to thank everybody who played important role in
successful realization of this thesis.
v
ABSTRACT
In the last few decades, retention of employees has become a real issue in
public and private organisations because of the openness and liberalisation of global
economy. These organisations have implemented various reward oriented schemes to
improve employees‟ work effectiveness and efficiencies. The key purpose of these
schemes is to retain valuable human capital and make employees more committed at
the work place. A number of empirical studies and anecdotal evidences indicated
employee retention is becoming a dilemma in private and public organisations
particularly in the higher education sector. The study explored the phenomena of
employee retention and total rewards by examining the mediating role of
organisational commitment and job satisfaction. In addition, the moderating role of
work volition between total rewards and job satisfaction was examined. This study
employed quantitative methods for data collection and analysis. Based on multistage
random sampling technique, a survey was conducted among faculty members of
higher educational institutions in Pakistan. Approximately 289 completed
questionnaires were received from the targeted population. Data checking,
preparation, screening, normality, descriptive statistics, confirmatory factor analysis
(CFA) and hypotheses were tested using Analysis of Moment Structures (AMOS-
21). The key findings indicated that total reward has a significant impact on job
satisfaction, organisational commitment and employee retention. These findings also
showed that work volition significantly moderated the relationship between total
reward and faculty member‟s job satisfaction in the higher educational institutions.
Theoretically, the research has implications in the existing state of knowledge by
proposing a noble policy and practice for the higher education sector of Pakistan.
vi
ABSTRAK
Dalam beberapa dekad yang lepas, pengekalan pekerja telah menjadi satu isu
dalam organisasi awam dan swasta diseb/abkan oleh keterbukaan dan liberalisasi
dalam ekonomi global. Organisasi telah melaksanakan pelbagai skim berorientasikan
ganjaran untuk meningkatkan keberkesanan kerja dan kecekapan pekerja. Tujuan
utama skim ini adalah untuk mengekalkan modal insan yang berharga dan
menjadikan pekerja lebih komited di tempat kerja. Beberapa kajian empirikal dan
bukti anekdot menunjukkan bahawa pengekalan pekerja menjadi dilema dalam
organisasi swasta dan awam terutamanya dalam sektor pendidikan tinggi. Kajian ini
meninjau fenomena pengekalan pekerja dan jumlah ganjaran dengan mengkaji
peranan perantara komitmen organisasi dan kepuasan kerja. Di samping itu, peranan
penyederhanaan kerelaan kerja antara jumlah ganjaran dengan kepuasan kerja telah
dikaji. Kajian ini menggunakan pendekatan kuantitatif untuk pengumpulan dan
analisis data. Berdasarkan teknik pensampelan rawak berbilang, satu kaji selidik
telah dijalankan dalam kalangan ahli fakulti institusi pendidikan tinggi di Pakistan.
Sebanyak 289 soalselidik yang lengkap telah diterima daripada populasi yang
disasarkan. Semakan data, penyediaan, penyaringan, kenormalan, statistik deskriptif,
analisis factor pengesahan (CFA) dan hipotesis telah diuji menggunakan Analysis of
Moment Structures (AMOS-21). Dapatan utama kajian menunjukkan bahawa jumlah
ganjaran mempunyai kesan yang signifikan terhadap kepuasan kerja, komitmen
organisasi dan pengekalan pekerja. Dapatan ini juga menunjukkan bahawa kerelaan
kerja menyederhanakan secara signifikan hubungan antara jumlah ganjaran dan
kepuasan kerja ahli fakulti di institusi pendidikan tinggi. Secara teorinya, kajian ini
mempunyai implikasi kepada pengetahuan sedia ada dengan mencadangkan polisi
dan amalan baik untuk sektor pendidikan tinggi di Pakistan.
vii
TABLE OF CONTENTS
CHAPTER TITLE PAGE
DECLARATION
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
ABSTRAK
TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
LIST OF ABBREVIATIONS
LIST OF APPENDICES
ii
iii
iv
v
vi
vii
xii
xiii
xiv
xv
1 INTRODUCTION 1
1.1 Research Background 1
1.2 Higher Education System in Pakistan 4
1.2.1 Current Issues in Higher Education
Institution in Pakistan 6
1.3 Statement of the Problem 8
1.4 Research Questions 13
1.5 Research Objectives 13
1.6 Purpose of the Study 14
1.7 Significance of the Study 14
1.8 Scope of the Study 15
1.9 Operational Definitions of the Variables 16
1.9.1 Total Rewards 16
1.9.2 Employee‟s Retention 16
viii
1.9.3 Job Satisfaction 17
1.9.4 Organizational Commitment 17
1.9.5 Work Volition 17
1.10 Organization of Thesis 18
1.11 Summary 20
2 LITERATURE REVIEW 21
2.1 Introduction 21
2.2 Importance of Retention 21
2.3 Factors Affecting Retention 24
2.4 Theories of Employees Retention 31
2.4.1 Met Expectation Model 34
2.4.2 Casual Model 35
2.4.3 Intermediate Linkage Model 37
2.5 The Concept of Reward Management 38
2.6 The Concept of Total Reward (TR) 40
2.6.1 Financial Rewards 42
2.6.2 Non-financial Rewards 46
2.7 Job Satisfaction 49
2.7.1 Two Factor Theory of Job Satisfaction 52
2.8 Organizational Commitment 56
2.8.1 Affective Commitment 58
2.8.2 Continuance Commitment 59
2.8.3 Normative Commitment 60
2.9 Work Volition 61
2.10 Total Rewards Linking to Employee‟s Retention 62
2.11 Total Rewards and Job Satisfaction 64
2.12 Total Rewards and Organizational Commitment 67
2.13 Relationship between Job Satisfaction,
Organizational Commitment and Retention 69
2.14 Moderating Role of Work Volition 71
2.15 Conceptual Model of the Study 72
2.16 Summary 73
ix
3 METHODOLOGY 74
3.1 Introduction 74
3.2 Research Design 75
3.2.1 Rationale in Selecting a Quantitative Method
for this Study 75
3.3 Units of Analysis 77
3.4 Population and Sampling 78
3.5 Sampling Techniques 79
3.6 Instrument Development 80
3.7 Questionnaire Design 81
3.7.1 Research Instrument 82
3.7.2 Structure of the Questionnaire 82
3.7.3 Demographic Information 82
3.7.4 Total Rewards 82
3.7.5 Job Satisfaction 83
3.7.6 Organizational Commitment 84
3.7.7 Work Volition 84
3.7.8 Retention 84
3.8 Pre-Testing the Survey 87
3.9 Face Validity 87
3.10 Pilot Study 87
3.10.1 Data Collection Procedure 88
3.10.2 Delivery of the Survey Instrument 88
3.10.3 Invitation to Participate 89
3.10.4 Maximizing Return Rate 89
3.10.5 Survey Collection 89
3.11 Data Analysis 90
3.11.1 Common Method Bias 90
3.11.2 Normality Test 90
3.11.3 Confirmatory Factor Analysis 91
3.11.4 Discriminant Validity 93
3.11.5 Descriptive Analysis 94
3.11.6 Pearson Correlational Analysis 94
3.11.7 Structural Equation Modelling 94
x
3.11.8 Test of Mediation Effect 95
3.11.9 Test for Moderation 96
3.12 Summary 97
4 DATA ANALYSIS 98
4.1 Introduction 98
4.2 Data Screening 98
4.3 Examination of Data Entry and Missing Data 99
4.4 Assessment of Outliers and Normality 100
4.5 Univariate Normality 100
4.6 Multivariate Normality Assumptions 102
4.6.1 Normality 102
4.7 Linearity 104
4.8 Multicollinearity 106
4.9 Homoscedasticity 106
4.10 Detection of Outliers 107
4.11 Sample Description 109
4.12 Measurement Model 110
4.13 Instrument Validity 112
4.14 Convergent Validity 113
4.15 Average Variance Extraction (AVE) 115
4.16 Composite Reliabilities (CR) 115
4.17 Discriminant Validity 116
4.18 Structural Model Validation (Hypothesis testing) 117
4.19 Moderation Effect 124
4.20 Conclusion 125
5 DISCUSSIONS AND CONCLUSIONS 126
5.1 Introduction 126
5.2 RQ1: To what extent do total rewards directly
influence employees‟ job satisfaction? 126
5.3 RQ2: To what extent do total rewards directly
influence the organizational commitment? 128
xi
5.4 RQ3: To what extent do total rewards directly
influence the employees‟ retention? 131
5.5 RQ4: Does job satisfaction mediate the relationship
between total rewards and employees‟ retention? 134
5.6 RQ5: Does organizational commitment mediate
the relationship between total rewards and
employees‟ retention? 136
5.7 RQ6: Does work volition moderate the relationship
between total rewards and job satisfaction? 137
5.8 Implications of the Study 139
5.8.1 Theoretical Implications 139
5.8.2 Managerial Implications 140
5.9 Limitations of the Study 142
5.10 Future Directions and Recommendations 143
5.11 Conclusion 144
REFERENCES 145
Appendices A-D 184-198
xii
LIST OF TABLES
TABLE NO. TITLE PAGE
2.1 Summary of Recent Studies on Employees Retention 27
2.2 Herzberg‟s Two-factor Theory 54
3.1 Sampling plan for Public Sector HEIs 79
3.2 Sampling plan for Private Sector HEIs 80
3.3 Measurement Scale 85
3.4 Reliability Test 88
3.5 Fit indices and their acceptable thresholds 92
4.1 Usable and Unusable Questionnaire Rates 99
4.2 Missing Value Analysis 100
4.3 Assessment of Normality (Group number 1) 101
4.4 Multicollinearity Statistics among Independent Variables 106
4.5 Observations Farthest from the Centroid (Mahalanobis
distance) (Group number 1) 108
4.6 Demographics 109
4.7 Overall Measurement Model (All Constructs) 112
4.8 Unstandardized and Standardized Regressions Weights 114
4.9 Average Variance Extraction (AVE) 115
4.10 Construct Reliabilities 115
4.11 Inter-Construct Correlations 116
4.12 Inter-Construct Correlations & Square root of Average
Variance Extraction (AVE)
117
4.13 Hypothesis of the Current Study 117
4.14 Path Analysis for Direct Relationships 119
4.15 Results for Direct Analysis (Dimension Wise) 121
4.16 Mediation Analysis (Indirect Effects) 123
xiii
LIST OF FIGURES
FIGURE NO. TITLE PAGE
1.1 Organization of the Thesis 19
2.1 Input and Output Theory 32
2.2 Reproduction of the Relationship between Determinants,
Intervening Variables, and Turnover 36
2.3 Reproduction of the Causal Model of Turnover 37
2.4 Total Reward Model 42
2.5 Job Satisfactions Model 51
2.6 Proposed Model of the Study 73
3.1 Deduction and Induction Social Science Theory Source 76
3.2 Sampling Strategy for the Current Study 79
3.3 Moderation Effect Calculation 97
4.1 Regression Standardized Residual of Independent and
Dependent Variables 103
4.2 Normal P-P Plots of Regression Standardized Residual of
independent variables for Employee Retention. 103
4.3 Scatter Plots of RET and TR 105
4.4 Scatter Plots of Standardized Residual Independent
Constructs 107
4.5 Measurement Model of All Constructs 111
4.6 Direct Relationship 118
4.7 Dimension wise Analysis 119
4.8 Mediation Analysis of Job Satisfaction 121
4.9 Mediation Analysis of Organizational Commitment 122
4.10 Structural Model 4( Moderation Effects) 124
4.11 The Moderation Effect 125
xiv
LIST OF ABBREVIATIONS
AGFI - Adjusted Goodness of Fit Index
AMOS - Analysis of Moment Structure
AVE - Average Variance Extracted
BTS - Bartlett's Test of Sphericity
CFA - Confirmatory Factor Analysis
CFI - Comparative Fit Index
CIPD - Chartered institute of Personnel Development
CMIN - Minimum Chi-square
CMV - Common Method Bias
DEI - Degree Awarding Institutes
DF - Degree of Freedom
EFA - Exploratory Factor Analysis
GFI - Goodness of Fit Index
HEC - Higher Education Commission
HEI - Higher Education Institutes
KMO - Kaiser-Meyer-Olkin Measure of Sampling Adequacy
MSA - Measure of Sampling Adequacy
NFI - Normed Fit Index
RJP - Realistic Job Previews
RMR - Root Mean Square Residual
RMSEA - Root Mean Square Error of Approximation
SERVQ - Service Quality
SPSS - Statistical Package for Social Sciences
TLI - Tucker Lewis Index
TLI - Tucker Lewis Index
VIF - Variance Inflation Factor
xv
LIST OF APPENDICES
APPENDIX TITLE PAGE
A Survey Letter 184
B Survey Questionnaire 185
C Results of AMOS for the Current Study 193
D Research Publications 198
CHAPTER 1
INTRODUCTION
1.1 Research Background
During past two decades, technological advancement and globalization
caused drastic changes in the work environment. Despite the nature of the business,
modern organizations are keen to retain their workforce to get competitive advantage
over their rivals through skilled workforce (Harvey, 2009; Reiche, 2007; Holbeche,
2009, Kuruvilla and Ranganathan, 2010). Therefore, retaining employees has
become the core strategic policy issue for organizational sustained growth and
competitive advantage (Heinen and O‟Neill, 2004, Bersin, 2008, Holbeche, 2009).
Previous studies highlight that organizations are facing enormous challenges
of retaining skilled employees (Arthur, 1994, Budhwar and Mellahi, 2007, Drucker,
1999; Samuel and Chipunza, 2009; Price, 2003; Holland, et al., 2007). To overcome
challenges such as organizational structure, culture, leadership styles and rewards
etc. (Sheridan, 1992; Pamela, 2003) and to retain employees, organizations have
implemented numerous human resource strategies and practices (Hom, Roberson,
and Ellis, 2008; Kacmar, et al., 2006; Michaels, Jones, and Axelrod, 2001). One of
such human resource practices is of rewards and benefits, which motivate employees
to work and stay connected with one organization (Sweeney and McFarlin, 2005;
Ozdemir, 2009; Wegge, et al., 2007; Mount, Ilies and Johnson, 2006; Armstrong and
Murlis, 2004). These rewards and benefits are termed as total rewards that aim to
maximize the combined effect of wide range of reward elements on motivation and
commitment, and embraces all that employees value in their employment (Anku-
2
Tsede and Kutin, 2013; Cao, Chen and Song, 2013; Kaplan, 2007; Armstrong, 2006;
O‟Neal, 1998).
Total rewards include the traditional pay and benefits employees receive as
part of their employment as well as other programs that help make the work
experience more fulfilling such as work-life balance, career mobility and
acknowledgement (Cao, et al. 2013; Durrani and Singh, 2011; Medcof and Rumpel,
2007). Research studies point out that employees in general and experienced
employees in particular are motivated through non-financial rewards like work life
balance, personnel appreciation, challenging tasks, special projects etc. (Jeffords et
al., 1997; Hytter, 2007; Zahra, Irum, Mir and Chisti, 2013). Thus, organizations are
engaged in developing innovative compensation packages that not only include
financial benefits but also non-financial benefits to attract and retain employees
(Gibson and Tesone, 2001; Muralidharan and Sundararaman, 2011; Zingheim and
Schuster, 2005; Milkovich and Newman, 2008, Chen and Hsieh, 2006; Armstrong
and Murlis, 2004). With the advent of industrial based economy to knowledge
economy, the compensation packages have become tied to individual‟s skills and
capabilities rather than experience and span of service (Chen and Hsieh, 2006; Bates,
2004).
With the integration of market due to technological advancements such as
information and communications technology, organizations are feeling the pinch of
aggressive competition and are striving hard to remain sustainable and competitive
(Hill, 1994; Singh and Singh, 2010). To attain the competitive position, organizations
need to develop a winning combination of its resources that is financial, human and
intangible resources (Chen., and Wang, 2010) and amongst the resources human
capital are the most valuable asset of an organization (Armstrong, 2010). To attract
this capital, organizations try to create a positive image in the minds of potential
employees and to enhance the commitment levels of existing employees (Macey et
al., 2009). Therefore, the role of organizational rewards is critical in defining the
employee‟s satisfaction and commitment with their organization.
3
Research has revealed that satisfaction and commitment are significantly
related to each other. Employees who are satisfied are also committed to their work
and organization (Noe et al., 2005; Becker, 1992; Williams and Hazer, 1986; Lee
and Mitchell, 1994; Bolon, 1997; Benkhoff, 1997; Boles and Babin, 1996; Chughtai
and Zafar, 2006; Valle, Harris and Andrews, 2004). Similarly, rewards and
commitment are found to be significantly related to each other. Researchers highlight
that both financial and non-financial rewards are essential for employees‟
commitment and retention but non-financial rewards have been found to have more
close relationship with commitment than financial rewards (Goulet and Frank, 2002;
Gould-Williams, 2004; Dick, 2011; Miao, Newman, Sun and Xu, 2013).
Furthermore, it has been observed that when employees perceive that their
organization is benefitting them with good rewards and recognition they reciprocate
it with better outcomes and behaviors and have less turnover intentions (Grawe,
Daugherty and McElroy, 2012; Najafi et al., 2011).
Like any other organizations, higher education institutions are also facing the
challenge of retaining employees, especially academic staff (Ahmad, et al. 2015;
Nawaz and Pangil, 2016). The internationalization of education has made higher
education institutions competitive in their respective fields. Universities are looking
for skilled staff with attractive reward packages. High quality academic staffs are the
corner stone of any successful educational institution, as these are the highest source
of knowledge and awareness production institutions in the country (Khalid, Irshad,
and Mahmood, 2012). Past studies highlight that academic staff focus more on their
intrinsic satisfaction than on extrinsic satisfaction (Wu and Short, 1996; Place, 1997).
However, research also emphasizes that both intrinsic and extrinsic satisfaction
predict satisfaction of academic staff (Dvorak and Philips, 2001).
This study is motivated (inspired) from the previous studies to investigate the
role of total rewards in attaining satisfaction and commitment of employees that
would subsequently result in their retention in the context of higher education
institutions. Oshagbemi (2003) has highlighted that there exist very few empirical
studies in the international context that have been carried out on academic staff and
their satisfaction with their work. Similarly, researchers also highlight the factors like
4
total rewards, and other organizational factors that are crucial for motivating
academic staffs, which include not only raising their satisfaction levels but also their
retention (Anku-Tsede and Kutin, 2013; Khalid et. al., 2012; Mubarak, et al., 2012;
Ghaffar et al., 2013).
1.2 Higher Education System in Pakistan
Higher education plays pivotal role in the development of any society and
serves as a core factor in economic and social development of a country. Universities
are serving for centuries developing potential professionals, businessmen, political
leaders, religious and social scholars for the development of society (Mustard, 1998).
Without a well-developed system of education, especially higher education, no
country can develop socially and economically (Quddus, 1979).
Higher Education Commission of Pakistan is planning to develop Higher
Education Institutions (HEIs). Till 2012 less than 20% of the faculty members were
PhDs in HEIs of Pakistan, the aim is to triple the number till 2020 (HEC, 2013). Also
Higher Education Commission (HEC) of Pakistan aims to develop the HE sector and
plans to have at least 5 universities in top 300 universities of the world. As a result of
various HEC initiatives, six Pakistani universities are now ranked among top 300
Asian universities while two Pakistani universities are now ranked among top 300
sciences and technology institutions of the world (HEC, 2013).
The Government of Pakistan is making significant investments in developing
institutional facilities, introducing new disciplines in cutting-edge and market based
technologies, developing human resource including faculty, improving research
facilities and student services, creating linkages with local and foreign universities
and promoting university-industry interaction, amongst many others (HEC, 2014).
HEC has been spearheading research in universities which has led to the creation and
growth of indigenous knowledge in all academic fields. Universities in Pakistan have
equally responded passionately to all the initiatives taken by HEC towards research
and development and many projects have made their presence felt at national and
5
international forums. The activities of HEC for promotion of Research and
Development (R&D) encompass capacity building of researchers and faculty,
support to universities in promoting research, and commercialization of research
(HEC, 2013). HEC implemented programs to attract foreign nationals, expatriate
Pakistani scientists and engineers in academia, and professional organizations to
come to Pakistan on short-term assignments (at least for one semester) at
public/private sector universities and DAIs. The interaction between Pakistani
universities and their foreign counterparts has opened avenues for future research
collaboration and faculty exchanges. This program intends to provide an opportunity
for sharing of expertise and knowledge by the public sector universities and degree
awarding institutions with learned expatriates or foreign scholars from reputed
universities/research organizations abroad.
Research and Development Division (R&D) has established 32 academic
linkages of Pakistani universities with foreign universities in which researchers,
faculty members, and PhD scholars from Pakistani public sector universities have
been extended opportunities to work in collaboration with foreign scholars (HEC,
2013). HEC plans to increase the skill level of the employees of HEI in Pakistan
through the capacity development programs and international collaboration, this
result into culturally diverse HEIs. In 2014, the number of HEIs increased to 160 in
total where 90 are public sector and 70 are private sector.
For higher education institutions, faculty is most valuable human asset that
can be a source of competitive benefit. The growing employment trend has
stimulated the competition among institutes to sustain their strategic position and
reputation in this sector (Hussain, 2005). Higher education sector in Pakistan has
become a potential employment sector and due to growing employment prospects in
this sector the retention of experienced faculty members has become essential. The
well-being of the university depends on its ability to recruit and retain a talented
professional (Hagedorn, 2000).
In order to strengthen the overall higher education system, the government of
Pakistan established Higher Education Commission (HEC) in 2002 to work towards
6
strengthening the universities in terms of research, teaching and faculty. The top
most priority of the commission after its establishment was to develop the existing
faculty and recruit new skilled faculty to strengthen the universities so that they
could share their contributions in the economic development of the country. HEC
also initiated several measures to attract and retain skilled faculty such as developing
compensatory packages. However, the focus of the efforts has been on the financial
rewards to attract and retain the existing university academic staff (Mubarak et al.,
2012).
The Higher Education Commission of Pakistan is planning to improve the
ranking of Higher Education Institutions (HEIs). To date less than 20% of the faculty
members in Pakistani HEIs hold PhDs, the aim is to triple the number before 2020
(HEC Pakistan, 2013). Also the Higher Education Commission (HEC) of Pakistan
aims to develop the HE sector and plans to have at least 5 universities ranked within
the top 300 universities of the world. As a result of various HEC initiatives, six
Pakistani universities are now ranked among the top 300 Asian universities while
two Pakistani universities are now ranked among the top 300 sciences and
technology institutions of the world. However, these initiatives from HEC Pakistan
are not adequate in order to achieve high levels of the HEIs quality standards. As a
result still no Pakistani university could make it in top 500 ranked universities
according to QS ranking (2015). This signals the existence of the issues in Pakistani
HEIs. Human resource is the key element in bringing competitive advantage in the
HEIs of Pakinstan (Hussain, 2005). Thus, it is required to study the causes and
consequences that affect skilled employee retention among HEIs of Pakistan.
1.2.1 Current Issues in Higher Education Institution in Pakistan
The growth of higher education in Pakistan has been prolific since last two
decade. It is evident that after emergence of HEC, universities and HEI are become a
desired employment sector, where individuals with high credentials are applying by
choice. Not only government but the private universities and DAI are also paying
handsome remuneration and good career path align with the policies of HEC (Hyder
7
and Reilly, 2005). The growing employment trends in education sector also promote
competition among faculty members to maintain their social and economic status
(Hussain, 2005). This sense of emerging competitions among the faculty members
and higher education institutions of Pakistan has led to the foundations of so many
challenges. These challenges includes faculty teaching and research work load, job
insecurity, low remuneration, work-life imbalance, resource constraints, lack of
interaction with the industry, infringe benefits, training, etc. (Abbasi, et al., 2011;
Haider, 2008; Memon, 2007; Shami and Hussain, 2006). Work load is an important
issue among the faculty members working in different universities in Pakistan
(Rasheed and Aslam, 2010; Manzoor., Usman., and Naseem, 2011; Abbasi, et al.,
2011).
Concurrently, increased job capacity in the education sector has increased
competition in the academia, as a result faculty members are doing postgraduate and
doctorate studies in national and international universities to improve their
professional qualification and skills (Husain, 2005). Likewise, faculty members are
now taking an interest in research activities and hundreds of research output has been
published nationally and internationally every year. Moreover, international
collaborations of faculty and researcher also have been increased. Thus, research
productivity of university has been increased exponentially due to the interest of
faculty members in research activities. According to Smeenk et al., (2008),
productivity is measured by research output and ability to deliver lectures. This sense
of emerging competition in the higher education institutions of Pakistan led the
foundations of so many challenges for the HEIs. Advanced scholarly competences
and talents may create conflicts in organization. Higher academic performance, in
terms of research output and teaching abilities during the year, brings higher
monetary and nonmonetary outcome for the faculty members. This sense of
emerging competition in the higher education institutions of Pakistan led the
foundations of so many challenges for the HEIs. Higher intellectual capabilities and
skills can lead to high employee turnover. Thus, consequently the employee retention
became a real challenge for the Pakistani HEIs (Shoaib et al., 2009; Khan et al.,
2011; Malik et al., 2010; Hassan et al., 2011). This provide rational for studying the
employee retention in the HEIs of Pakistan.
8
1.3 Statement of the Problem
The role of higher education institutions in the development of human capital
is essential for social, economic and technological development of a country. By
their distinctive nature universities are projected to be a source of the most skilled
and specialized intellectuals and serve as warehouse of knowledge for promoting the
human capital requirements of the nation and hence for satisfying the aims of the
people for a good and civilized society. Central to the appreciation of universities
goals and objective are the academic staffs whose roles are essential for the quality
and effectiveness of the university education (Jain, 2013; Mwadiani and Akpotu,
2002). Pienaar and Bester (2008) strongly argue that academic profession is vital to
the functioning of any university and without committed and qualified academic
staff; no educational institution can really certify quality and sustainability over long
haul. Thus, universities are more dependent on creative and intellectual abilities and
the commitment of academic staff.
Employee‟s retention is one of the constructs that has been widely studied
and still holds importance for those who work in organizations and who study them
(Malik et al, 2010). Organizations are trying their best to create environment for
employees where they feel satisfied, and be able to offer high pay for experiences
and highly qualified employees so as to fill the key positions. This is because the
number of employees to fill the key positions is very limited in the market, and this
has created competition among organizations to get the talented employees. This
scenario is similar in higher educational institutions that are always in search of
experienced, qualified and skilled faculty members to enhance their image and
prestige (Mubarak et al., 2012).
Since it is very difficult to find highly educated and experienced faculty to
work within higher education sector, it is important to know what this sector could
do to ensure that the existing employees continue working with the existing
organization in this sector. Cao et al. (2013) argued that experienced and outstanding
employees may leave an organization because they become underpaid, dissatisfied,
unmotivated by the organizations mainly due to HR policies related to either
9
financial (e.g. attractive remuneration, retirement benefits, and medical facility) or
non-financial (training and development, career opportunities, work-life balance,
challenging tasks, and attractive organizational culture) policies. Thus, organizations
try to enact policies in the form of total reward that would help them retain best
employees for a longer period of time (Cao et al. 2013).
Similar is the case of HEIs in Pakistan, the major issue faced by higher
education institutions is the retention of capable and skilled faculty in the fierce
competition by other higher educational institutions and industry (Mahmood and
Shafique, 2010, Mubarak, et al. 2012; Hyder and Reilly, 2005). However, with the
opening of new higher educational institutions existing educational institutions in
both private and public sector are facing tremendous challenge of not only retaining
their competitive position but also retaining the existing faculty (Hussain, 2005;
Mubarak et al., 2012). Availability of jobs with higher rewards and environment are
suitable for career development. On the other hand, it brings a challenge for the HEIs
to retain their talented employees as well and pushing HEIs to review their employee
retaining strategies (Malik et al., 2010). The challenge of retaining employees for
longer period of time requires organizations to create an environment, where
employees are not only engaged but also to have the sense of job and career security
(Chaminada, 2007). The previous researcher are agree on the importance retention of
skilled employees in the organization (Cao et al. 2013; Malik et al., 2010;
Chaminada, 2007; Mubarak et al., 2012; Jain, 2013; Mwadiani and Akpotu, 2002;
Pienaar and Bester, 2008). However, little attention has been paid to address the
factors that play primary role in employee retention in the organization. Although,
some of the studies tried to investigate the underlying factors that affect the
employee retention (Khan et al., 2011), but these efforts were to investigate the
individual level link of these factors with employee retention and not focused on the
holistic strategic approach to solve the issue. This pertain a clear gap in the literature
to formulate and test a broader strategic perspective of the employee retention,
especially in the case of Pakistani HEIs. Thus the current study attempts to fill this
gap through investigating strategic approach to the employee retention in HEIs of
Pakistan.
10
Studies have highlighted many factors that can influence employee intention
to work with the HEIs or quit. According to Ali (2008) lecturers' turnover in private
colleges at Pakistan is more than 60% on average. This highlights the difficulty for
the HEIs to retain their skilled employees. Furthermore, Ahmed et al. (2010)
identified the pull and push factors for employee retention. They found that the
demographic and socio-economic factors such as age, gender, salary, family related
issues, children education and social status are the major contributors of the
employee retention among the teachers in Pakistani HEIs. Noordin and Jusoff (2009)
have highlighted that the societal expectations depend upon the successful running of
education system relating to the involvement, effort and contribution of academic
staff or their professional expertise. Mubarak et al. (2012) identified the employee
satisfaction is the major factor that contribute to the employee retention in HEIs of
Pakistan. Researchers have highlighted that a positive climate, which is depicted by
the satisfaction level of employees, increases the overall productivity of the
institutions of higher education faculty‟s satisfaction in universities is important for
employee retention (Ghaffar et al., 2013; Noordin and Jusoff, 2009; Baloch, 2009).
Thus, these studies theoretically confirm the relationship between the employee job
satisfaction and employee retention. However, limited efforts have been done to
empirically test this relationship in the HEIs setting. Thus, the current study aims to
investigate the relationship between employee job satisfaction and employee
retention in HEIs of Pakistan to fill this gap.
It is also observed by the researchers that the satisfaction of employees
depend on many factors like strategic rewards and employee level of commitment
with organization (DeVaney., and Chen, 2003; Wegge et al., 2007; Baloch, 2009;
Ozdemir, 2009; Alam and Farid, 2011; Mumtaz et al. 2012; Khalid et al., 2012;
Islam et al., 2012; Ghaffar et al., 2013; Siddiqui and Saba, 2013). Therefore, it is
imperative to understand the behaviour and attitude of faculty to make them satisfy
and increase their commitment levels that would help in retention. The past literature
has looked at retention from various perspectives such as its relationship to rewards
(Mulvey et al., 2002, Müller et al., 2009), relationship of rewards with employees
job satisfaction and organizational commitment (Nawab et al., 2011, Danish and
Usman, 2010, Malhotra et al., 2007), and their impact on employees retention (Anis
11
et al., 2011). There are only few studies that have been conducted on linkages
between these factors in the context of higher education institutions in developing
countries (Siddiqui and Saba, 2013; Ghaffar et al., 2013). Thus, the current study
aims to investigate the relationship between the total rewards, employee job
satisfaction, organizational commitment and retention.
In addition, research highlights that work volition plays an important role
towards satisfaction and commitment of employees (Duffy, et al., 2013a; Duffy and
Lent, 2009; Lent, et al. 2011). According to the Merriam Webster Dictionary,
volition is defined as “the power of choosing or determining”. Haggard and Lau
(2013) define volition in terms of internal motivation of an individual. So, it is
suggested that employees who are valued at work may be satisfied with their work,
even if that was not their first choice (Barkway, 2006). Therefore, Duffy et al.
(2012a) describe work volition as the perceived capacity of an individual to make
occupational choices despites constraints. Researchers are of the view that predictors
of job satisfaction have been tested on well-educated individuals who had high levels
of choice in selecting their career paths (Blustein, 2006; Diemer and Ali, 2009) but
may be different for individuals with high and low levels of work volition (Duffy and
Dik, 2009). However, all these studies have been conducted in the contexts of
developed countries, and have taken different professions such as business, finance,
information technology, computer engineering, education, medicine and research
rather than the developing countries.
Work volition can be an important contributor towards satisfaction of
employees. In the academic setting the construct has been checked against the
sample of students and teachers to find out their career decision and academic
satisfaction (Jadidian and Duffy, 2012; Duffy et al., 2012a; Duffy et al., 2012c).
Researchers have pointed out that work volition should be measured against various
intervention techniques that increases satisfaction level of individuals at work
(Jadidian and Duffy, 2012; Duffy, et al., 2013b) or multivariate testing of the
predictors that mediate to predict job satisfaction (Duffy, et al., 2013). Furthermore,
Duffy, et al., (2012a,b) are of the opinion that the construct should be tested in
various situations and settings. Thus, the present study investigates work volition in a
12
moderating capacity to check its influence on the relationship between total rewards
and job satisfaction in academic setting.
Similarly, research that have been conducted on the topic in Pakistan have
focused highly on the job satisfaction levels and commitment amongst the academic
staff of both public and private sector higher educational institutions (Mubarak et al.,
2012; Ghaffar et al., 2013; Siddiqui and Saba, 2013; Islam et al., 2012). However,
there is a need of a research work that not only focuses on the job satisfaction and
commitment but also look at the total rewards towards retention of academic staff by
higher education institutions. Secondly, there is no study especially in the context of
Pakistan that takes into account employees work volition when studying satisfaction
or commitment and as researchers suggest that the construct of work volition should
be tested in different situations and contexts. Thirdly, the variable of commitment
has been studied extensively in a variety of situations and contexts and yet its
importance cannot be negated in a developing country like Pakistan. According to a
study, there is a high turnover rate of 8.4 percent among the teaching faculty
associated with higher educational institution in Pakistan (Khuwaja, et al., 2013).
This presents an alarming situation for the universities. Researchers suggest that
there is a need to study factors that lead to commitment among the professionals
especially the influences of career choices (work volition) and work life policies in
enhancing commitment and retention (Naqvi and Bashir, 2012).
Theoretically the current study is based on the social exchange theory.
According to Markovsky et al. (1988), social exchange is the result of interactions
between employee and social structures that might influence employee‟s decision to
quit the organizations. According to Cropanzano and Mitchell (2005), social
exchanges theory is the most widely used theory in many disciplines and it is among
the most influential conceptual paradigms for understanding workplace behavior.
Thus, the implications of this theory in the cause of the current study are more
relevant to determine the employee retention among academic staff of HEIs in
Pakistan. In the light of the above arguments, this study is an attempt to fill the gap
that exists in total rewards, job satisfaction, work volition, commitment and retention
literature related to developing countries perspective and specifically in the context
13
of Pakistan. Secondly, this study would provide insights related to the issues and
challenges that are faced by higher education institutions in the retention of capable
employees and would be useful in recommending practical suggestions that could
help institutions in retaining their employees.
1.4 Research Questions
These questions have been formulated that would guide the study.
i. Is there any relationship between total rewards and employees‟ job
satisfaction i.e. intrinsic satisfaction and extrinsic satisfaction)?
ii. Is there any relationship between total rewards and organizational
commitment i.e. affective, normative and continuance commitment?
iii. Is there any relationship between total rewards and employee retention?
iv. Does job satisfaction mediate the relationship between total rewards and
employees‟ retention?
v. Does organizational commitment mediate the relationship between total
rewards and employees‟ retention?
vi. Does work volition moderate the relationship between total rewards and
job satisfaction?
1.5 Research Objectives
Based on the research background and problem statement, following
objectives are outlined for the study:
i. To examine the relationship of total rewards with employees‟ job
satisfaction (i.e. intrinsic satisfaction and extrinsic satisfaction).
ii. To examine the relationship of total rewards with the organizational
commitment (i.e. affective, normative and continuance commitment).
iii. To examine the relationship of total rewards with the employees‟
retention.
14
iv. To examine the mediating role of job satisfaction the between
relationship of total rewards and employees‟ retention?
v. To examine the mediating role of organizational commitment between
the relationship of total rewards and employees‟ retention?
vi. To examine the moderating role of work volition between the
relationship of total rewards and job satisfaction?
1.6 Purpose of the Study
The purpose of this study is to determine and investigate the effect of total
rewards on the retention of faculty members in higher education institutions of
Pakistan. The study examines the total rewards in the retention of employees.
Furthermore, the present study also analyze the mediating roles of job satisfaction
and organizational commitment on the retention of employees and moderating role of
work volition in enhancing job satisfaction and retention of employees.
1.7 Significance of the Study
The significance of the present study stems from two perspectives –
Theoretical and Managerial. From theoretical perspective the present study would
add to the existing body of knowledge regarding the variables of the study. Further, it
will add to the understanding of retention of employees especially in higher
education institutions from the perspective of a developing country. Furthermore, the
use of work volition as a moderator between total rewards and job satisfaction,
commitment and employee retention would also contribute significantly to the body
of knowledge. The inclusion of moderating variable of work volition is an important
theoretical contribution towards retention of employees as it has been tested against
job satisfaction in prior studies. As this is a new construct, therefore, the present
study would enhance the role work volition plays in understanding the job
satisfaction, commitment and retention of employees.
15
The model proposed could further be tested in various cultural contexts, and
could be used in developing strategic organizational policies regarding total rewards
for retaining capable individuals. Currently, in developing countries, organizations
especially higher education institutions are facing challenges in retaining the
academic staff in the face of industrial organizations that provide higher rewards and
compensatory benefits to attract capable individuals. Thus, the present study would
also try to recommend as to how total rewards can be used in attracting and retaining
capable individuals that could enhance the overall effectiveness of these higher
educational institutions.
From management perspective, the findings of this study (will be) or are
valuable to higher education commission (HEC) of Pakistan, top management of
HEIs, HR managers and practitioners to design their total reward policies within a
strategic framework to retain the skilled and experienced human resources that are
very much needed for the overall development of the educational institutions.
1.8 Scope of the Study
This study looks at the total rewards as practiced by the HEIs in Pakistan. The
total rewards include both financial in terms of salary and fringe benefits and non-
financial rewards in terms of promotional opportunities and career development,
work environment, work-life balance, work content, working conditions, leadership
and recognition. Organizational commitment is deconstructed into affective,
normative and continuance commitments; while job satisfaction is limited to intrinsic
and extrinsic dimensions. The dependent variable of employee retention and the
moderator variable of work volition are considered as composite variables, and have
not been deconstructed like other variables of the study. This is done to make the
proposed model easy to understand and comprehend. Furthermore, the scope of the
study is limited to private and public sector universities in Pakistan. According to
HEC, there are 160 HEIs belonging to both public and private sector (HEC, 2014).
Due to paucity of time and cost constraints not all of them can be taken.
16
1.9 Operational Definitions of the Variables
Following are the operational definition of variables for the current study.
1.9.1 Total Rewards
Rewards refer to all the benefits that employees get from their organizations
(Herzberg, 1966; Mottaz, 1988), and are important determinants of employee job
attitudes such as job satisfaction and organizational commitment (Herzberg, 1966;
Steers and Porter, 1991). Reward refers to all systems of financial return, tangible
and non-tangible benefits an employee receives as part of an employment affiliation
(Bratton and Gold, 1994). Total rewards is an employee oriented remuneration
design system encompassing the traditional rewards in the form of pay and fringe
benefits and non-traditional rewards in the form of work-life balance, recognition,
work environment, training and promotion opportunities etc. (Cao, et al., 2013).
Thus, this research defines total rewards in terms of tangible and intangible benefits
that accrue due to employment affiliation. For the current study scale to measure
total rewards was adopted from Medcof and Rumpel (2007).
1.9.2 Employee’s Retention
Retention is a voluntary move by an organization to create an environment
which sustains employees for a longer period of time (Chaminade, 2007). According
to Samuel and Chipunza (2009), the main purpose of retention is to prevent the loss
of competent employees from leaving an organization as this could have an adverse
effect on profitability and productivity. Thus, for the present study employee
retention is defined in terms of organizational strategies that are enacted to retain
employees in the organization for a longer period of time.
17
1.9.3 Job Satisfaction
Armstrong (2010) refers to job satisfaction is the degree to which an
employee‟s feels positively or negatively about his or her job. Hoppock (1935),
mentioned job satisfaction as being any number of psychological, physiological and
environmental circumstances which lead an individual to express his/her satisfaction
with their work. Job satisfaction could be used as measure of pleasure an employee
has with the organization. For the present study, job satisfaction is defined in terms
of how is an employee‟s feeling towards his/her job.
1.9.4 Organizational Commitment
Organizational commitment is an employee‟s orientation toward the
organization in terms of their loyalty to, identification with, and involvement in the
organization (Robbins and Coulter, 2005). This employee commitment is
demonstrated by the employee‟s willingness to be involved with the vision, mission,
and values of the organization in which they work. For the present study
organizational commitment is taken as employees‟ feelings towards their
organization that compels them to engage in the well-being of the organization.
1.9.5 Work Volition
Duffy et al. (2012a) describe work volition as the perceived capacity of an
individual to make occupational choices despite constraints. Haggard and Lau (2013)
define volition in terms of internal motivation of an individual. Thus, for the present
study work volition is taken as an internal motivation that compels an individual to
work or seek employment in the face of employment constraints.
18
1.10 Organization of Thesis
This thesis is divided into five (05) chapters as shown in Figure 1-1. While
the introductory chapter sets out the scene of this research and points to the general
area of this research, the chapter also describes the research questions, research
process and the contributions this research will make.
Chapter 2 reviews the literature on total rewards, employees‟ retention, job
satisfaction, organizational commitment, and work volition. Then on the basis of
literature reviewed the gaps are identified and to fill these gaps a set of hypotheses
are proposed which will guide the empirical research that is presented in chapter 3.
Chapter 3 provides the research methodology, which is adopted to analyze
the link between the research variables. The chapter proposes quantitative analysis
techniques to examine the effects of total rewards on employees‟ retention using job
satisfaction and organizational commitment as mediators and work volition as
moderator between total rewards and job satisfaction.
Chapter 4 presents the descriptive analysis of the survey questionnaire and
analyzes the data by using the updated version of SPSS, Structural Equation
Modeling (SEM) using AMOS 21. The chapter presents the results relation to the
hypothesis developed in chapter 2. While each chapter has a quite independent
approach towards the subject matter, chapter 2, 3 and 4 relate to each other by
offering to the same set of hypothesis.
Chapter 5 synthesizes the various findings and triangulate the results against
each other. This chapter also presents the central implications (theoretical and
managerial) that this study has for theory, policy, and management. Finally it
addresses the limitations of this research and points to future avenues of research that
might help to overcome them.
19
Figure 1.1 Organization of the Thesis
20
1.11 Summary
Retaining capable and skilled employees is a challenging task for the
organizations in today‟s knowledge economy. Organizations especially the higher
educational institutions are always in search of highly skilled and capable individuals
that could provide them an edge over other institutions. Furthermore, these
employees could help educational institutions to contribute towards the national
development both in terms of economic development as well as societal
development. Thus, organizations adopt strategies and policies in the form of total
rewards that could help them attract and retain such individuals.
The present chapter has highlighted some of the issues in the form of problem
statement. The chapter also presented research objectives and research questions that
would guide the study along with the scope and significance of the study. In the end,
operational definitions of the major variables of the study are given.
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